Genzyme Oks $2B Buyback, Mulls Options For 3 Units

CAMBRIDGE, Mass. -- Biotechnology company Genzyme Corp. said
Thursday its board of directors approved a $2 billion stock buyback
program and the company said it will explore strategic alternatives
for three businesses.

Under the buyback plan, $1 billion of stock will be repurchased
in the near term and financed with debt. The additional $1 billion
will be repurchased over the next 12 months. Genzyme has about
266.3 million shares outstanding.

The company said it plans to pursue strategic alternatives for
its genetic testing, diagnostic products, and pharmaceutical
intermediates businesses. Options could include divestiture,
spin-out, or management buy-out.

The buyback plan and potential sale of several units follows a
first-quarter loss as the company reels from manufacturing problems
at its plant in the Allston neighborhood of Boston.

Viral contamination and other problems the plant forced Genzyme
to shut down production for about three months in 2009. Later in
the year, the FDA discovered particles of trash in some of the
company's drugs. The production problems cut off full production of
the drugs Cerezyme and Fabrazyme, which treat rare hereditary
illnesses.

Genzyme had to pay a $175 million government fine in the first
quarter, and the company is seeking approval to open a new facility
in Framingham, Mass. Still, Genzyme said in April that for the next
two to three months, it still will only be able to ship enough
Cerezyme to meet half of global demand.

The company also said it wouldn't be able to ship more than 30
percent of Fabrazyme demand through the third quarter, which will
continue to depress sales. The company's new Framingham
manufacturing plant isn't expected to be approved until late
2011.

Cerezyme is a treatment for Gaucher disease, an enzyme disorder
that can cause liver and neurological problems. Fabrazyme treats
Fabry disease, which is caused by the buildup of a particular type
of fat in the body's cells.

Genzyme has been restructuring its management over the course of
the year. Since the manufacturing problems surfaced, the company
named a new president of global manufacturing and corporate
operations, along with a senior vice president of global product
quality. It also contracted out manufacturing for some of its key
products.

In March the company named David Meeker to the newly created
position of chief operating officer.

In April, the company elected Ralph Whitworth to the board of
directors as part of a deal with Relational Investors LLC.
Whitworth is the principal and co-founder of Relational, which is a
$6 billion private investment fund and one of Genzyme's largest
shareholders.

The company also said it was committed to nominating an
additional independent director to the board.

The board addition comes as activist investor Carl Icahn
attempts to gain control of the board.

Genzyme's annual meeting is scheduled for June 16.

Shares of Genzyme rose 53 cents to $53.56 in afternoon trading.
Over the past year, shares have traded between $47.09 and
$63.47.